Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:53 AM EST
S&P 500: +5.10; 1,520.50
NASDAQ 100: +5.75; 1,961.75
Dow: +23.00; 13,540.00
NIKKEI 225: +0.04%; 18,146.30 (+7.94)
HANG SENG: -0.75%; 21,772.73 (-165.49)
S&P/ASX 200: -0.18%; 6,263.30 (-11.60)
BSE SENSEX 30: +0.09%; 14,664.26 (+13.75)
FTSE 100: -0.52%; 6,573.40 (-34.50)
CAC 40: -0.49%; 6,024.99 (-29.94)
XETRA-DAX: -0.75%; 7,947.20 (-60.12)
Commodity Futures (Reuters/Jefferies CRB)
Oil: -0.14%; $70.58 (-$0.10)
Gold: +0.63%; $655.00 (+$4.10)
Natural Gas: -1.83%; $6.65 (-$0.12)
Silver: +0.86%; $12.58 (+$0.107)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
Wii Extends Lead Over PS3
Sources: Associated Press, Reuters
Commentary: Analysts More Bullish Than Ever on Nintendo • Nintendo Market Cap Rises Above Sony's • Japanese Exporters Look Poised to Profit from Weak Yen
Stocks/ETFs to watch: Nintendo (OTCPK:NTDOY) (JP: 7974), Sony (SNE) (JP: 6758), Microsoft (MSFT). Gaming software publishers: Electronic Arts (ERTS), Activision (ATVI), Konami (KNM), Take Two (TTWO), THQ (THQI)
It's Official: Citigroup Buys Automated Trading Desk For $680M
Confirming a Wall Street Journal article from June 27, Citigroup announced Monday it has agreed to purchase electronic platform trader Automated Trading Desk for $680 million in cash and stock, based on Citi's Friday closing price of $51.29. Citi is paying $102.6 million in cash and issuing 11.17 million Citigroup shares in exchange for Automated Trading, which will become a division of the bank's global equities business. Automated Trading has approximately 120 broker/dealer customers and despite employing only about 100 people, handled roughly 6% of the equity trading volume on major exchanges in the U.S. last year.
Sources: Press Release, Reuters, MarketWatch, TheStreet.com
Commentary: Citibank In Advanced Talks To Acquire Automated Trading Desk -- WSJ • CreditSights Analyst Joins The 'Breakup Citi' Team • Citigroup Clinches Key Stake in Nikko Cordial
Stocks/ETFs to watch: Citigroup Inc. (C). Competitors: Bank of America (BAC), JP Morgan Chase (JPM), HSBC (HBC). ETFs: iShares Dow Jones US Financial Services (IYG), Financial Select Sector SPDR (XLF)
Conference call transcripts: Citigroup Q1 2007 Earnings Call Transcript
Related: Automated Trading Desk
Consolidated Communications to Buy North Pittsburgh for $375 Million
Consolidated Communications said Monday it will acquire North Pittsburgh Systems for $375 million ($25/share) -- a 17.6% premium on Friday's close. North Pittsburgh has been under pressure from activist investor Phillip Goldstein/Bulldog Investors to sell the company; they say it's worth $28.50-31/share. North Pittsburgh shareholders can take either $25 or 1.1 Consolidated shares for each share. Consolidated plans to finance the cash portion of the purchase price with debt and cash on hand; financing will come from Wachovia, which was also Consolidated's advisor on the purchase. "North Pittsburgh delivers an attractive market, a strong network, and a history of success, providing a solid foundation on which we can build," the company said. Its "advanced network... can be leveraged to increase the penetration of broadband products and, with limited capital investment, to rollout video service. Approximately 99% of North Pittsburgh access lines are currently DSL capable and Consolidated expects to launch its video product in the Western Pennsylvania markets in 2008," it said. Consolidated says the acquisitions will boost its free cash flow in its first year.
Sources: Press release, MarketWatch, Seeking Alpha
Commentary: Bulldog Investors Once Again Urges North Pittsburgh Systems to Sell
Stocks/ETFs to watch: Consolidated Communications Holdings Inc. (CNSL), North Pittsburgh Systems Inc. (NPSI)
Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.
Today's Market (via Sam Collins, ChangeWave.com)
Recap of Friday's Action
On Friday, investors tended to focus on the latest inflation indicator, the Commerce Department's core personal consumption expenditures [PCE] deflator, which showed a modest increase of just 0.1%. This puts the year-to-year inflation at 1.9%, and that's finally within the Fed's acceptable range.
To top off a good day of economic readings, the University of Michigan's consumer sentiment index rose to 85.3, from 83.7 earlier in June, and this beat economists' estimates of 84.1. But the inflation reading and concerns over hedge fund issues led some investors to move money into bonds. And that, along with an increase in the price of crude oil and the London bomb scare, chased off stock buyers. However, Apple (AAPL) rose 1.2% on the first day of sales for the iPhone.
At the close Friday, the Dow Industrials fell 14 points and closed at 13,409, the S&P 500 lost two at 1,503 and the Nasdaq closed at 2,603, down five. The NYSE traded 1.6 billion shares and the Nasdaq did 2.2 billion, with breadth at a negative 8-to-7 on both exchanges. The 10-year Treasury note closed at 95 28/32, up 17/32, with a yield of 5.033%.
Despite the problems with the two hedge funds managed by Bear Stearns (BSC), combined with some nasty new and existing home sales numbers as well as rising crude oil prices for the week, the averages managed to register a small gain. The Dow Industrials were up 48 points, the S&P 500 was up less than a point and the Nasdaq was up 14.
Friday was also the end of Q2 -- a period in which the markets had the best quarterly performance since Q4 2003 -- which saw the Dow up 8.5%, the S&P 500 up 5.8% and the Nasdaq up 7.5%. For the first half of the year, figures were a positive 7.6%, 6% and 7.8%, respectively.
On Friday, crude oil (August contract) closed over the psychologically important $70-a-barrel level, ending the day at $70.68, up $1.11. And the Amex Energy SPDR (XLE) added 30 cents to close at $68.99. Gold (August contract) gained 50 cents at $650.90 and the Philly Gold and Silver Index [XAU] was up $1.08 at $135.94.
What the Markets Are Saying
Technically the big news is that, despite the overhang of nervousness about the subprime/hedge fund mess, the averages held above their June lows. Meanwhile, the bond market seems to have at least temporarily found some stability, with yields on the 10-year Treasury holding just above 5%.
That's all good news, and so is the reported record amount of short sales on the NYSE. And despite the fact that investors who short are making a bet that the market will fall, history has proven them wrong -- especially when their numbers hit record levels. In fact, what usually happens is that they are "squeezed" as the market works its way higher and then even accelerates upward, as shorts cover their positions in a panic because they fear further potential losses.
Today's Trading Landscape
This week will no doubt be slow as a result of only a half-day of trading tomorrow and then the July Fourth holiday on Wednesday. There are no significant earnings reports due today, but watch for the Institute for Supply Management's figures for June to come out at 10 a.m. Terrorist attacks in London have had little impact on the world's markets, and most have opened higher.
Asian Headlines (via Bloomberg.com)
• Asian Stocks Climb, Paced by Caltex on Oil; Mitsubishi Estate Declines Asian stocks advanced for a third day, led by energy-related shares, after declining U.S. fuel stockpiles and attempted car bombings in the U.K. lifted the price of crude.
• Wesfarmers to Buy Coles for $17.7 Billion in Record Australian Takeover Wesfarmers Ltd., Australia's biggest home-improvement chain, agreed to buy Coles Group Ltd. for A$20.7 billion ($17.7 billion) to become the nation's largest retailer.
• Japan's Tankan Survey of Business Confidence Holds Near a Two-Year High Confidence among Japan's largest manufacturers held near a two-year high and companies said they're increasing spending, supporting the central bank's argument for raising interest rates.
• Adaro May Seek $600 Million in Indonesia's Biggest Stock Sale, People Say PT Adaro Indonesia, the nation's second-largest coal producer, plans to sell shares in what would be the country's biggest initial public offering.
• Jim Rogers Says He's Sold `Over-Exploited' Emerging Markets, Except China Jim Rogers, who predicted the start of the global commodities rally in 1999, said he's sold out of all emerging markets with the exception of China because they're ``over-exploited.''
European Headlines (via Bloomberg.com)
• European Stocks Drop on Terror Concern; Air France, British Airways Fall European stocks dropped for the first time in three days, paced by airlines and insurers after attempted terrorist attacks in the U.K.
• Manufacturing Growth in Europe Accelerated in June Amid Hiring, PMI Shows Manufacturing growth in the euro region accelerated more than initially estimated in June, supporting the case for the European Central Bank to keep raising interest rates.
• Government Bonds in Europe Rise on Terrorism; Yields Fall to 10-Year Low European bonds advanced, pushing 10- year yields to the lowest in more than three weeks, as investors sought the safety of government debt after terrorists targeted central London and Glasgow.
• Italease Shares Drop After Company Pays $829 Million to Unwind Derivatives Shares of Banca Italease SpA dropped 11 percent after the company paid 610 million euros ($829 million) to unwind more than 80 percent of its derivative contracts with bank counterparties.